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After a Hurricane: Can the Property Manager Be Blamed for a Lessee's Losses?
The recent decision in Sears Roebuck & Co. and Kmart Corp. v. W/S Lebanon LLC, 2017 U.S. Dist. LEXIS 143902 (D. N.H. 9/6/17) (Sears and Kmart), seems timely in light of the fact that commercial landlords, tenants and their insurance providers are grappling with the problems caused by the extreme wind and rain of hurricanes. In the Sears and Kmart case, the hurricane in question was 2011's Hurricane Irene, which roared up the east coast and then lingered over New England as a tropical storm, depositing flooding rains over several states, including New Hampshire.
Kmart Corp. had an ongoing long-term lease with landlord Windalier West Lebanon, LLC. Windalier, in turn, had a property management contract with K.G.I. Properties, LLC, which ended a month before two rivers in the vicinity of the Kmart shopping plaza flooded, damaging the building Kmart occupied, as well as its contents. When the management contract with K.G.I. ended, Windalier entered into a similar property management agreement with Keypoint Partners, LLC. Keypoint was therefore in charge of the property's management when the flooding actually took place.
Kmart brought suit against Windalier, K.G.I. and Keypoint for, inter alia, breach of contract and negligence. All defendants moved for summary judgment on these claims.
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